Thurston County Housing: What the Market Shows and What Policy Will Decide Next
By Jessie Simmons
The Government Affairs Desk
Category: Housing & Affordability
The latest housing data for Thurston County is easy to misread if reduced to headlines. Prices are slightly higher. Inventory is rising. Sales are slower than a year ago. Depending on the framing, that can sound like either a cooling market or improving affordability.
The reality is more specific — and more constrained.
What the data shows is a housing market that has reached an affordability ceiling, operating under a policy environment that is trying to unlock supply while continuing to add cost and complexity.
A market adjusting, not correcting
In November 2025, the median price of a residence in Thurston County rose just 0.84 percent year over year, reaching $529,450. In real terms, that is essentially flat pricing, especially in a high-interest-rate environment where buyers are acutely sensitive to monthly payments. Sales dipped slightly, but pending sales increased. That matters. It signals that demand has not disappeared. Buyers are still active, but they are moving more cautiously and taking longer to close. Inventory rose to just over three months of supply. While that is a notable increase from recent lows, it remains well below the four to six months typically associated with a balanced market. Even after a sharp rise in active listings, Thurston County is still undersupplied.
This is not an overbuilt market. It is a market normalizing after years of constraint, now limited by affordability rather than demand.
Costs are rising even as prices are not
That distinction matters because the public cost side of housing continues to climb. At both the county and city levels, permit fees, technology surcharges, and inflation-adjusted impact fees are becoming normalized. Comprehensive plans have been adopted or are nearing completion, shifting the focus from vision statements to implementation through code updates and regulatory interpretation. Individually, these actions appear incremental. Collectively, they matter a great deal.
In a market where prices are flat and buyers are stretched, every additional dollar added to the cost of building — whether through fees, timelines, or compliance requirements — narrows the range of housing that can realistically be delivered. Entry-level homes, missing-middle housing, and workforce-scale multifamily projects are the first to feel that pressure. The risk facing Thurston County is not a lack of demand. It is the quiet erosion of feasibility at the margins.
Where policy alignment shows results
Against that backdrop, Olympia’s recently adopted Missing Middle Code provides an early example of policy alignment producing real movement. A residential proposal on Garfield Avenue, which recently advanced through a right-of-way vacation hearing, is moving forward specifically because the new code created a clearer path for multi-unit housing types in areas that were previously constrained. Right-of-way vacations are procedural hurdles typically tied to site assembly and access, and the fact that this project is advancing suggests the code change is already influencing developer behavior.
One project does not solve a housing shortage. But it does demonstrate something important: when standards are clear and regulatory barriers are reduced, builders will respond — even in a cautious market.
The outlook
The near-term outlook for Thurston County’s housing market is best described as slow-growth and affordability-limited. Demand remains. Inventory is improving but still tight. Prices are no longer rising fast enough to absorb continued increases in public costs. The jurisdictions that succeed in this environment will be those that focus less on aspirational policy language and more on disciplined implementation: predictable timelines, objective standards, and restraint in adding new layers of cost.
The question is no longer whether local governments support housing in principle. It is whether their codes, fees, and processes allow housing to be built in practice.
What to Watch in 2026
• Comp Plan Implementation: The real impacts will come from code updates, critical-areas interpretation, concurrency standards, and mitigation requirements — not the plans themselves.
• Fees vs. Market Reality: Continued fee escalation in a flat-price market will increasingly determine what types of housing are feasible.
• Missing Middle Outcomes: Early projects like Garfield will show whether new entitlements actually translate into production or stall under development standards.
• Permitting Timelines: Process efficiency will matter as much as cost. Delays now carry higher financial risk.
• Entry-Level Supply: Watch whether policies meaningfully support housing that working households can afford, not just housing that is allowed on paper.
